Nebraska Governor hopes for extension of wind-power tax credit

Source: By Joe Duggan, WORLD-HERALD BUREAU • Posted: Tuesday, October 23, 2012

LINCOLN — Gov. Dave Heineman gave conditional support to extending the federal tax credit for wind power Monday after speaking at the Nebraska Wind Conference.

The credit, set to expire at the end of the year, has become a contested issue in the presidential race, with Democratic President Barack Obama saying he would extend it while Republican challenger Mitt Romney wants to let it end.

Nebraska’s Republican governor, a strong ally of Romney’s, said Monday that he would like to see Congress extend the credit, although he would understand if it went away to help reduce the nation’s budget deficit.

“I hope they find a way to keep it,” Heineman said. “It’s been very beneficial to wind.”

When questioned about the tax credit in August, the governor took a neutral position.

The subsidy costs taxpayers more than $1 billion annually but it helps wind power to compete with cheaper sources of electricity. Wind energy advocates have made extension of the credit their top priority, predicting that the industry would lose nearly 40,000 jobs without it.

“The wind industry has its own little fiscal cliff coming” if the tax credit expires, said James Walker, one of the conference speakers who was a former board chairman with the American Wind Energy Association.

Although Nebraska’s wind energy production lags far behind most neighboring states, it’s not difficult to find examples of how the federal tax credit has affected the state.

Last week, officials dedicated a 50-turbine, $145 million wind farm near Broken Bow that has created seven permanent jobs. But elsewhere, uncertainty over the tax credit’s future has been cited as a reason behind the financial struggles of a Columbus, Neb., wind tower manufacturer, which could result in 214 layoffs unless a buyer for the company can be found.

The tax credit has garnered bipartisan political support in Iowa, which has more wind-related jobs and generates much more wind energy than Nebraska. Among the Iowa supporters is Republican Gov. Terry Branstad.

Despite the fact that Nebraska ranks fourth in terms of wind potential, the state produces fewer megawatts of wind electricity than any of its surrounding states.

Several speakers at the fifth annual Nebraska Wind Conference, a two-day event in Lincoln, said Nebraska could get into the game by approving tax rebates for wind energy developers.

Lawmakers considered such a bill last winter, but it was projected to cost about $5.6 million and died in the Revenue Committee.

A total of 28 states waive the sales tax on wind projects, including Kansas and Oklahoma, which compete directly with Nebraska when it comes to selling wind power to other states, said Derek Sunderman, an official of Kansas City-based TradeWind Energy.

Rather than pocket the rebates, developers pass them on to the utilities that buy a project’s electricity, Sunderman said. Such utilities aggressively seek out the lowest rates, so competition can be intense.

When all else is equal, the lack of a sales tax incentive in Nebraska adds about 5 percent to the total cost of a project when compared to a state that offers the credit, Sunderman said. He called lack of a tax abatement Nebraska’s “single largest impediment” to exporting wind energy.

“Fix that and this state starts to become competitive to utilities across the country,” he said.

Russ Knott, president of Petersburg State Bank, told the audience how two wind farm projects provided about 18 jobs and brought several young families to what had been a community in decline. He argued that the state would eventually recapture any sales tax rebate because of the increased economic activity created by the project.

“Maybe a little delayed gratification,” he said.

Sen. Heath Mello of Omaha said Monday that he and some of his colleagues intend to introduce a comprehensive renewable energy tax package during the 2013 legislative session.